The #1 Mistake New Government Contractors Must Avoid…or Forever Hold Your Peace


Although I say new government contracts, MOST GovCon businesses that are struggling have fallen into this common pitfall.

I say “new” because it’s the new small business owners who are excited and ready to conquer the world that are most vulnerable to the enticement of this mistake.

You see, this thing that I’m going to share with you is very alluring.

It promises a future for your government contracting business that is really exciting to you.

It makes you believe that you will be winning contracts, you will be the talk of your industry, and you will even be rubbing elbows and sharing in a hearty laugh with the 4-start General at your next conference.

At least this is the picture that gets painted in our minds, and we fall victim to its trap…

In reality, this thing does little to pull your GovCon business forward, and does everything to pull it back.

The biggest problem I have with this is that it is a huge time consumer.

As a small business owner, your time is absolutely precious.

You must stand guard against the big and small things that make wagers for your time in exchange for empty promises.

No deal is worth that.

The second problem I have (that’s worth having) is the cost.

Newly registered and certified businesses are like saplings.

They need lots of nourishment and they must be protected.

The last thing a newly planted tree needs is a bunch of weeds draining away its water and blocking out its sunlight, preventing it from growing into a strong mighty oak!

I’m a pretty level-headed guy, and in my perfect world things are measurable and quantifiable.

Anyone who knows me, knows that I believe a Small Business Owner’s number 1 goal is create GovCon business that runs like a well-oiled machine.

That’s the goal.

You should have a plan of attack, and all of your efforts should be aligned with that plan.

Anything that is not aligned is a distraction, and is the equivalent of driving with the e-break on.

Unfortunately, many don’t even have a strategic plan, but that’s a topic for another article.

Without further-adieu, avoid this dire mistake or Forever Hold Your Peace…


Chasing Everything

The verdict is in and “Chasing Everything” makes the top of the list for common pitfalls that especially new government contracts must avoid at all costs. (Que dramatic music).

At first, I had trouble putting this into words because it includes so many things.

To chase everything means you’re focused on nothing. You are a jack of all trades, and a master of none.

It means you’re not focused on targeting any specific agencies.

That means you’re bidding on any and everything on FBO that looks good.

And it means you’re so unfocused, that you are unable to building meaningful and lasting relationships with government POCs that will take your GovCon business from sapling to Mighty Oak!

Let’s break each of these down…


Agencies

In my book Winning Government Contracts, the first thing I teach you is to target 3-5 government agencies.

These should be agencies that buy what you sell, and they should be geographically close enough for you to visit regularly without breaking the bank. I say this for good reason.

If you are not absolutely killing it in your backyard, you have no business looking halfway across the country at other agencies.

What kind of competition do you think you’re going to run into over there? Probably a lot of strong local competition.

You should be that strong local competition at your local agencies.

Don’t let outside companies come in and steal your business.

Even Small Business Reps and the SBA prefer to keep things local, but they can’t always tell you that.

Help yourself out, and identify the agency targets you want to go after, and then put the blinders on to everything else (with few exceptions).


Random Bidding

Next, when you’re chasing everything, that means you’re nearly bidding on any and every opportunity that you think you stand a chance at winning.

Maybe you received an FBO update in your email and “this one” looks really good to you.

It would be so great to win it.

But what do you really know about it? Do you know the agency? Do you know the competition? Are you familiar with how this work was performed in the past, or if it’s a new job, do you have the inside scoop?

If this was one of your target agencies you would.

Except it's not, and now you’re bidding against companies that do have the answers to these questions.

What do you think your chances of winning are?

As a small business you must be smart. Sometimes it’s things that you don’t do that matter the most.


Unfocused Relationship Building

The last point I want to mention about chasing everything is unfocused relationship building.

This only applies to those small business owners that are actually leaving their office and meeting with government POCs.

Those of you who are not, I will be writing several articles about the importance of development relationships with key government POCs. You have some homework to do. Back to the story.

You absolutely MUST be developing relationships at your target agencies.

This is not optional.

As you visit them, these key people are going to eventually start to remember your business, but it doesn’t happen over-night.

If you’re only visiting the agencies in your back yard a couple times a year because you’re visiting other agencies that are not targets of yours, you stand almost zero chance of any of them remembering you.

I hate to say it, but a bird in hand really is worth two in the bush…or in this case, lots more! Try $41,784 a year and 960 hours of your time! You’ll definitely want to keep reading.

When I make statements, it’s important for me to be able to validate them. For the sake of this article, I will be using Time Drain and Financial Burden as the measuring posts to substantiate my claims.

In this section, we discussed what happens when you specifically don’t have agency targets.

To quantify, that includes time on unsuccessful Proposal Bids and time spent with people that are never going to remember you.

For the sake of this article, I will use 12 random proposal bids annually and 12 unfocused random meetings (although in reality, I suspect these numbers are much higher for some).

We will look at the Time Drain of chasing everything, first.


Time Drain

Think about the time it takes to put together a small to medium-sized proposal. Think of all the activities required.

For quantifying, I combined some and organized them below. Look how quickly it all adds up:

One Proposal-

  • Browse opportunity searches, Review multiple Opportunity Requirements, perform a Bid/No-Bid matrix, Finally Choose the opportunity: 8 Hours
  • Gather past performance: 2 hours
  • Formulate pricing: 6 hours
  • Write to the technical sections of the proposal: 8 hours
  • Other research, phone calls, miscellaneous supporting activities: 3 hours
  • Review Proposal Compliance Matrix: 2 hours
  • Proposal Submission: 1 hour

TOTAL. 30 hours of time drain

Assuming a small to medium-sized proposal completed by a team of two.

Annual x 12 = 360 hours annual time drain


Now let’s do the same for one unfocused meeting.

One Unfocused Meeting-

  • Phone calls and emails leading up to the meeting: 3 hours
  • Travel to and from the meeting: 10 hours (assuming out of state)
  • Landed time before returning home: 36 hours (assuming 1.5 days out of state for meeting)
  • Follow up once you’re back home: 1 hour

Total. 50 hours of time drain

Numbers assume a short trip where you only have one agency meeting.

Annual: 50 x 12 = 600 hours annual time drain

Now that we’ve taken a look at wasted time, let’s see how these activities translate into costs.


Financial Burden

One Proposal-

Time spent on proposal (calculated above) = 30 hours

I will use a modest rate of $35/hour assuming this is being prepared by employees and not outside consultants (which would be more than double this rate).

Calculation: 30 hours x $35/hour = $1,050 Financial Burden

Annual: $1,050 x 12 = $12,600 annual financial burden

Assumes electronic submission, and that no postage or binder materials were purchased to create a hard copy submission.

And now the cost of one random meeting:

One Unfocused Meeting-

Time spent on one meeting (previously calculated) = 50 hours

Your hourly rate $35/hour

Calculation: 50 x 35 = $1,750

Additional:

  • Modest Round-trip plane ticket to Charlottesville = $350 (not checking a bag)
  • May 2019 GSA Lodging rate for Charlottesville: $132 (one-night stay for 36-hour trip)
  • Meals and Incidentals: $71/day, we will round to $100 for the day and a half trip
  • Uber transportation: $100

Total: $1,750 + 350 + 132 +100 + 100 = $2,432

Annual: $2,432 x 12 = $29,184

These Grand Totals are staggering!

Grand Total Annual Time Drain: 960 Hours!

360+ 600= (120 working days or 1/3 of a working year!)

Grand Total Annual Financial Burden: $41,784!

$12,600 + $29,184

There are a lot of assumptions and flexibility with the numbers I’ve put together.

The numbers will be different in every person’s situation.

There are many other time and money wasters that exist, but chasing everything and being unfocused is the most common that I see, and it is the most lethal to new small business owners trying to get things off the ground.

In my example, imagine syphoning off 40k cash from your brand-new business and only being able to work 3 days a week.

This would cripple any new business from standing on its own two feet.

Although, that’s what we see at almost every conference we go to.

There are small business owners that have become cynical about government contracting and are wondering what they are doing wrong.

If this is you, take a good look at your calendar and see where your time and money is being spent.

And don’t fret because there is a light at the end of this tunnel.

This article has been about the opportunity cost of not doing the right things.

So now imagine what happens when your activities become aligned with a strategic plan.

What happens when you stop doing the wasteful activities and starting doing activities that will build your pipeline?

This is called doubling-down.

Now you’re heading in the right direction twice as fast as you were prior.

If you have fallen into this pitfall, you would be amazed at how quickly doubling down can turn around your business.

If you are brand new, you have an amazing opportunity in front of you to do things right from the very beginning!

I hope you apply what you read in this article to your business, and that it helps bring you closer to GovCon business goals.


Warm Regards,

Derek James